Industry Stats & Data by eMarketer

Behavioral targeting has been the focus of much unwanted regulatory attention in recent months. The US Federal Trade Commission has held hearings about behavioral targeting, and two state governments have proposed laws to limit it.

Still, marketers increasingly look toward the Internet to reach their audience, and, in a slowing economy, seek tactics, such as behavioral targeting, to make the most of each dollar spent.

Behavioral targeting segments the audience based on observed and measured data—the pages or sites users visit, the content they view, the search queries they enter, the ads they click on, the information they share on social networking sites and the products they put in online shopping carts. That data is combined with the time, length and frequency of visits on Web sites. Recency is important, too. Data from two weeks ago is far less accurate at predicting interest than data from two days ago.

US spending for behaviorally targeted online advertising will reach only $775 million in 2008 due to incomplete development of this complex technology, brand marketers who would still prefer to have their ads appear with relevant content, and advertisers’ concerns about violating consumer privacy.

But eMarketer projects a steep rise in 2009 to $1.1 billion, going up to $4.4 billion in 2012. The major driver behind this rapid increase is online video advertising, which will require targeting to make it cost-effective. (At this point, though, video advertising and behavioral targeting rarely mix.)

Impressive growth in behavioral targeting will occur from 2010 to 2012. The influx of brand advertising online will support behavioral targeting’s growth, but brands will not reach a critical mass for display-type advertising until that period.

Behaviorally targeted advertising is more expensive than nontargeted ad inventory. Far fewer targeted ads need to be sold than run-of-network ads to make an equivalent amount of money.

Behaviorally targeted advertising contributes little to total US Internet ad spending, making up only 3% in 2008. However, when pegged against the display online ad formats that are typically used for behavioral targeting, the importance of behavioral targeted to non-search advertising growth becomes clearer.

Nearly one in 10 content site ad dollars will flow from behaviorally targeted advertising in 2008. That will rise to roughly one in four by the end of 2012. The question remains: Which one drives the other? It is unclear how much display ad spending will increase behaviorally targeted ad spending, in contrast to how much behavioral targeting capabilities will increase display ad spending.

Find out more about eMarketer’s Behavioral Targeting: Marketing Trends Report

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